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Mr. EDWARDS. I think there are several things in the bill-

Mr. COLE. I am speaking about title II.

Mr. EDWARDS. I think there are several things in the bill which are duplications of previously existing housing authorizations.

Mr. COLE. Title II, sir, is not.

Mr. EDWARDS. By and large.

Mr. COLE. Some of the features of it have been available under other legislation.

Mr. EDWARDS. As I explained to you

Mr. COLE. What are the differences between those features and the other law which would encourage the production of homes?

Mr. EDWARDS. If you will analyze my statement, you will find it applies to the bill as a whole.

Mr. COLE. I realize that, and I am not talking about the bill as a whole.

Mr. EDWARDS. All right, sir.

Mr. COLE. I assume, therefore, there is nothing in title II that encourages home loans for veterans.

Mr. EDWARDS. Other than it continues financing for veterans which is important in the general housing picture.

Mr. COLE. What about title IV, mortgage investment aids for veterans cooperatives? What will that actually do to help the veterans building homes?

Mr. EDWARDS. An analysis of that title which I have seen indicates that it would make these changes:

It would authorize 30-year 4-percent mortgages covering up to 95 percent of the value for builders, and 85 percent for contractors building these units. I think there is no question but that the increased incentive to veterans to group together for the purpose of building would be an advantage in encouraging them to undertake the projects which eventually would give them ownership of their own homes.

Mr. COLE. Do you think there is any demand for such a title or program?

Mr. EDWARDS. Yes, sir; we have a number of cooperative projects which have been started in Detroit, up to the present time. I think we would have a considerable number if this title were passed.

Mr. COLE. What is there about the title which would encourage them to increase in number?

Mr. EDWARDS. More liberal financing features.

Mr. COLE. Is this more liberal financing than is now available? Mr. EDWARDS. As I understand it, it is, sir-95 percent. I do not believe you can get, under any current legislation, 95 percent.

Mr. COLE. I understand there are provisions where you can get 95percent loans under the present law. I may be wrong.

Mr. EDWARDS. I do not know of any such, and I do not think any such are being used in Detroit at the present time.

Mr. COLE. With respect to the yield insurance, which is section 420, on pages 40 to 59, what do you think that may do to aid in the construction of homes?

Mr. EDWARDS. What page are you citing now?

Mr. COLE. Pages 40 to 59, "Yield insurance."

Mr. EDWARDS. This, generally, is a section which purports to give encouragement to builders for moderate income families. I think this is a field which has not adequately been served in rental housing in the

past, and I think it is a field to which encouragement should be given. I believe that all of us have come to recognize that you do not meet the total housing need by one product, at one price. That there has to be an effort to meet the needs of various income groups, and that this would purport to meet the needs of one of the income groups. Mr. COLE. What I am trying to find out, Mr. Edwards, is how it does that.

Mr. EDWARDS. Again, it allows for financing of projects which would serve a medium-income group.

Mr. COLE. In what manner?
Mr. EDWARDS. By guaranteeing.
Mr. COLE. By guaranteeing what?
Mr. EDWARDS. The mortgages.

Mr. COLE. I do not believe that provides for the guaranteeing of mortgages, does it? That is yield insurance, is it not?"

Mr. EDWARDS. I think you will find that the net effect is as I have stated it.

Mr. COLE. Of course, we have guaranties of mortgages now, have we not?

Mr. EDWARDS. Yes.

Mr. COLE. Is there any distinction particularly?

Mr. EDWARDS. Yes; I think the provisions are a little more liberal in this regard. I am not a mortgage banker, but it is my understanding from people who have made an analysis of this bill that this will bring further construction into this field through the more liberal financing features of it.

Mr. COLE. I understand the words "liberal financing features" are supposed to encourage the building of houses, but I do not know what it means. When you say "liberal financing features," I do not know what you mean by that. Liberal financing, Mr. Edwards, might cause such an inflation that we might not be able to do anything. I am trying to get some facts here.

Mr. EDWARDS. I would say, Mr. Cole, that a definition of a liberal financing feature would be a comparative guaranty to the mortgage. In some instances those guaranties are made in terms of 50 percent, 60 percent, 70 percent, 80 percent, 90 percent. When you get up to 90 percent and 95 percent, you certainly have liberal financing features. Mr. COLE. That is true, and when we get up to 100 percent we have still more liberal financing.

Mr. EDWARDS. That is correct.

Mr. COLE. The question should be, of course, whether we should make it completely liberal or not, and whether or not that would encourage construction. That is what I am trying to get at.

Mr. EDWARDS. I think the Federal Housing Administration plan applies to a specific group, just as the veterans cooperative section applies to another specific group. It is just a little added incentive.

Mr. COLE. I am not saying it is not good; I am just trying to find out what the facts are from the witnesses. Because I think we should be concerned, Mr. Edwards, from statements such as yours and practically all of the witnesses have done the same thing, who have come to us and have said, "We have a critical housing shortage. This bill will meet the critical housing shortage. Therefore, this bill should be passed." That is the type of testimony we have been having.

We have not had many people who have come in here and pointed out to us exactly how and why and in what manner this bill will meet the critical housing shortage, and, if I may say it to you in all kindness, I think you have done exactly the same thing. I am trying to find out how and in what manner the various titles of this bill will meet the housing shortage. Not by saying it will liberalize credit. That does not help me as a member of this committee. I am trying to find out in what manner it will do so.

Mr. EDWARDS. I think, Mr. Cole, without being unduly critical of any member of the committee, you apparently did not listen while I was talking about the bill, because I took it by section

Mr. COLE. I listened very carefully, sir, and not once did you answer one of those questions that I have asked.

Mr. EDWARDS. I think I have answered all of the questions that you have asked me up to date. Could I finish my statement?

Mr. COLE. All right.

Mr. EDWARDS. I believe that I pointed out to you, in starting in, that the research section of the bill, in my opinion, would do a great deal to bring down costs and to stimulate building. I do not antici pate that will follow within the next few months after the bill is passed, but I do believe it is an important feature of an over-all housing program.

Mr. COLE. I heard that, but I did not hear in what manner it will do it. I can say "Research will do wonders." It is a wonderful thing. I love it.

Mr. EDWARDS. I will tell you what I am talking about, Mr. Cole. I think eventually we can build houses in America on the production line, and I think we ought to start working on it and I do not think anybody is going to be able to do it unless some national concern has gotten into this field, because to date the aggregations of builders are operating on too small and too localized a scale to do the job. That is my personal opinion about it. It was derived from some years of experience with this particular proposition, and I think there is a very good chance that this research section could prove to be one of the most important elements of the bill.

I pointed out, secondly-and I was utterly serious about it-whether my opinion is correct or not, I do not know, but it is certainly the best that I can offer to the committee-that I believed that the declaration of a national housing policy, and the provision of these features of financing, as proposed in the bill, would lend a stability to the housing program of America which would encourage more builders, more suppliers, and more labor to get into it—which would break some of the bottlenecks which we know are currently stopping us.

Mr. COLE. I heard those statements, Mr. Edwards, but those are summations of an argument after you have presented the facts. I am sorry to say, sir, that I do not believe you have presented the facts. Maybe I do not understand the facts as I see them. That could be. I am limited by my capacity.

Mr. EDWARDS. I suppose, Mr. Cole, that you and I just do not agree. Mr. BANTA. Mr. Chairman.

The CHAIRMAN. Mr. Banta.

Mr. BANTA. Mr. Edwards, you stated a while ago that you were on the board of tax appeals of your city?

Mr. EDWARDS. Yes, sir; I am.

Mr. BANTA. Do you, in functioning as a member of the board of tax appeals, determine the value of property for assessment purposes? Mr. EDWARDS. Yes, sir.

Mr. BANTA. What do you take into consideration in determining the value of properties?

Mr. EDWARDS. Our tax-assessment procedure, Mr. Banta, is based on the application of reproduction value, with depreciation taken off each year. That is the standard system of tax assessment in the State of Michigan, and we have applied it for some time in Detroit.

Mr. BANTA. You, therefore, do not take into consideration the income return of the property?

Mr. EDWARDS. Only in a collateral manner. It is not the direct. basis for assessment. If a taxpayer appears before the board of tax review, seeks relief on the grounds that his property is not valuable because it is not producing income, then, we ask for the income figures.

Mr. BANTA. The reason I made that inquiry is I was amazed to hear your mayor testify that you had a building in the slum area of the city of Detroit which is presently assessed at $12,480 and the owner thereof receives an income from it amounting to $18,480 a year. It is just a little amazing to me that the city authorities can no nothing about that kind of a situation without coming here.

Mr. EDWARDS. I wish we could, Mr. Banta. I do not know what we can do. I could go even further than that. Under the United States Housing Act, we condemned two areas

Mr. BANTA. I might answer you in this way: That I do not live in thecity. We are told we have our share of slums. We have plenty of substandard housing, according to those who have made surveys of substandard housing, but our taxing authorities would very soon take care of that situation. You would not get by one year with an income of 50 percent more than assessed valuation of the house. That is one thing we could do. Of course, I do not know, but it might be that if people who own property, which is admitted to be very valuable, were made to pay on a fair assessment value, based on income as well as the other factors to be taken into consideration, you might have betterhousing in your city.

Mr. EDWARDS. I think you are very right. I would like very much to see that done, Mr. Banta. I do not think it can be done by the council. I think it would take an amendment to our State tax laws.

Mr. BANTA. It is my idea that would be a very good place for you to go instead of coming to the Federal Government and asking for a subsidy to tear down these buildings.

Mr. EDWARDS. I do not think there is much relationship between the two, Mr. Banta, but I think I would like to see a greater relationship between income return and tax payments in the city of Detroit. I might tell you, Mr. Banta, that since the mayor testified on that particular property, the landlord turned the gas off for his tenants,. according to the reports in the daily press, so that they are now that much worse off than previously.

Mr. BANTA. At any rate, the case is a very lucid example, as far as this committee is concerned. Here is another situation. It was testified here either by Mr. Van Antwerp or the executive director of the housing authority, that the average income of persons living in these

public housing units in Detroit is $2,700, and that you had one person in there who will probably make $22,000 this year, and that you had one with an income of $9,000, and one at least who admitted an income of $12,000. What is the highest rent?

Mr. EDWARDS. I believe the highest rents run $45 to $50 a month. Mr. BANTA. In other words, these persons making now $9,000 or $12,000, or $22,000, and 226 families are making over $5,000, and none of them paying over $45 a month.

Mr. EDWARDS. I believe, Mr. Banta, that the rents being paid by people at the level about which you are talking are figured to be complete economic rent so that there is no subsidy whatsoever involved in their occupying those houses. Do not misunderstand me. I do not support the principle of having over-income tenants in those places. As rapidly as we can get rid of them, we will do so.

Mr. BANTA. We will save time, Mr. Edwards, if you will confine your statements to answering my questions-$45 is your maximum rent? Mr. EDWARDS. That is right.

Mr. BANTA. So that you are subsidizing, are you not, persons who are making that kind of money, by providing them with rentals of $45 a month?

Mr. EDWARDS. I suppose that is correct, but I call your attention to the fact that that is not subsidized rent.

Mr. BANTA. Well, if it is not a subsidized rent, then, why is it that rentals of that kind cannot be had without public housing?

Mr. EDWARDS. Because these projects were built at very low cost, and because no profit is derived from them.

Mr. BANTA. And because there is a subsidy somewhere along the line?

Mr. EDWARDS. Certainly there is subsidy, to the maintenance of the low-rent dwellers, there certainly is subsidy.

Mr. BANTA. Then, there has been subsidy from the inception, if for nothing else, to whittle down the cost of these rents.

Mr. EDWARDS. Let me put it this way, Mr. Banta: If a particular unit, in order to carry its charges in full, for a period of years, be rented at $45 and break even, then, that is not a subsidized rent, as I understand it. If, on the other hand, a family is put in that unit and given a rental of $35, which is true in many, many cases, then, there is subsidization being given to that family.

Mr. BANTA. You said all your borrowing was private borrowing. Do you mean all your bonds have been sold to private investors? Mr. EDWARDS. Yes, sir.

Mr. BANTA. The public housing authority owns none of the bonds? Mr. EDWARDS. I do not mean that all the bonds on all the housing have been sold to private investors.

Mr. BANTA. There are no Government purchases?

Mr. EDWARDS. That is the best of my knowledge.

Mr. BANTA. We had some testimony here from one witness who said that his housing authority had had an opportunity to sell their bonds at a yield of 12 percent and the Public Housing Authority refused to let them do it. They required that the bonds be sold to the Public Housing Authority at 211⁄2 percent.

Mr. EDWARDS. We have had no such experience in Detroit.

Mr. BANTA. I was, therefore, a little amazed that all of yours was private borrowing and that the Government owns none of the bonds.

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